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Housing construction sees record fall in April
Housebuilding activity fell at a record rate last month as coronavirus hit, according to a major survey of construction firms.
The construction purchasing managers’ index (PMI) found that 86% of building companies across the UK saw a drop in business between March and April as sites closed in response to the pandemic.
Activity across all forms of construction fell to the lowest level recorded by the index since it launched in 1997. At an index reading of 8.2, it was far beneath the previous record low of 27.8 in February 2009.
Housing was particularly badly affected, but commercial construction and civil engineering also recorded their fastest decline in output since the survey began.
Many house builders announced in late March that they were closing sites as a result of the COVID-19 emergency.
However, some big players have returned to work as housing secretary Robert Jenrick urged them to keep building.
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The index, a monthly indicator of the construction industry’s workload, is calculated by business intelligence expert IHS Markit and the Chartered Institute of Procurement and Supply (CIPS).
Tim Moore, economics director at IHS Markit, said: “The rapid plunge in UK construction output during April stands out even in a month of record low PMI data for the manufacturing and service sectors.
“Widespread site closures and business shutdowns across the supply chain meant that vast swathes of the construction sector halted all activity in response to the COVID-19 pandemic.”
He added that there will likely be a “gradual reopening of sites in the coming weeks” but that “severe disruption across the supply chain” will be long term.
Duncan Brock, group director at the CIPS, said: “Though a fall in output was not a complete surprise, the scale and suddenness of the drop has knocked the wind out of building work in the UK.
“More vulnerable than other sectors that make up the UK economy, construction was unable to continue in any significant capacity, as companies grappled with furloughed staff and building sites under complete shutdown.”
The data indicates that coronavirus “has knocked the sector back another decade” after the 2008 financial crisis, he warned.
The survey also highlighted major supply chain issues, with average delivery times for construction products and materials lengthening the most on record.
New business for construction firms also fell at the fastest pace ever measured by the index.
Jan Crosby, UK head of infrastructure, building and construction at KPMG, suggested that affordable housing may help provide a “medium-term uplift” for the sector.
“Homes for heroes may finally come into their own – key worker accommodation for health workers must surely be at the top of the agenda for infrastructure spend,” he said.
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